South Korea's stock market experienced a sharp decline on Monday, with the benchmark Kospi index plunging over 5%, marking the steepest drop among Asia-Pacific markets as the Middle East war entered its fifth week [1]. The Kosdaq, which tracks small-cap stocks, also fell 3.97% [1]. Other regional indices followed suit: Japan's Nikkei 225 dropped 3.97%, the Topix lost 3.9%, Australia's S&P/ASX 200 was down 1.46%, and Hong Kong's Hang Seng index futures traded at 24,630, below the previous close of 24,951.88 [1].
The escalation in the Middle East conflict was highlighted by Yemen's Houthi movement, which announced on Saturday that it had fired ballistic missiles at Israeli military sites, marking its first direct involvement in the U.S.- and Israeli-led war against Iran [1]. Houthi spokesperson Yahya Saree stated on X that the strikes were in support of Iran and Hezbollah forces in Lebanon, signaling a further intensification of the conflict that began with U.S. and Israeli airstrikes on Iranian targets on February 28 [1].
The geopolitical tensions contributed to a rise in oil prices during early Asia trading hours, with West Texas Intermediate crude futures climbing 2.58% to $102.19 per barrel [1]. The negative sentiment extended to U.S. markets, where futures tied to the Dow Jones Industrial Average dropped 253 points (0.6%), and S&P 500 and Nasdaq 100 futures lost 0.5% each [1].
On Friday, the Dow Jones Industrial Average fell into correction territory, dropping 793.47 points (1.73%) to close at 45,166.64. The S&P 500 lost 1.67% to end at a seven-month low of 6,368.85, while the Nasdaq Composite dropped 2.15% to settle at 20,948.36 [1]. The broad market index recorded its fifth consecutive weekly decline, falling 2.1% for the week, with the Nasdaq sliding 3.2% and the Dow retreating 0.9% week to date [1].
CONCLUSION
The escalation of the Middle East conflict has triggered a broad sell-off across Asia-Pacific and U.S. markets, with South Korea's Kospi leading declines. Rising oil prices and continued geopolitical uncertainty are weighing heavily on investor sentiment, resulting in sustained market weakness and correction territory for major indices.